Contents

An initial public offering like Facebook's doesn't come along every day, or even every decade, and you better believe folks are talking about it. The social networking giant's $5 billion IPO filing revealed a ton of previously unconfirmed data about the company, including how it makes its money and how much it's been making, who and what it fears going forward, who owns how much of it, and much, much more.

Let's take a stroll around the Internets and see what's being said about the biggest and boldest Web 2.0 IPO to date.

The Big Picture
Facebook's S-1 filing was a "brilliant move," according to Tim Loughran, a finance professor at Notre Dame who has previously analyzed the initial offerings of Zynga, Groupon, LinkedIn, and other social media companies. Loughran thinks the company's IPO valuation of "only $5 billion" should make Facebook "a very hot IPO in terms of first-day returns ... $5 billion is not much to spread around to both retail and institutional investors (regardless of the offering price)."

Loughran also expects that a scarcity of shares will raise Facebook's market value in the short-term and propel the company to conduct a follow-on offering later, which could attract "institutional players to take more meaningful positions in Facebook."

But a close look at the numbers provided by Facebook reveals some math that could prove worrisome for investors, he told PCMagespecially given that the company basically admits that the tremendous growth rate of its user base in the past few years can't go on forever.

"Facebook has annual revenue of only $4.39 per active user," Loughran said. "That is a surprisingly low number. Right now, they have 845 million active users. If they get 3 billion active users (a hard-to-imagine number), keeping the assumption of $4.39 revenue for each user, Facebook would have yearly revenue of only $13.17 billion."

By way of comparison, Apple last week reported profits of $13.06 billionfor a single quarter. Loughran's rather dry advice to Mark Zuckerberg and Co.: "Facebook needs to find more ways to get revenue from their users."

Still, the social network's balance sheet looks pretty inviting compared to some other big-time tech firms who held IPOs in recent years, notes TechCrunch's MG Siegler, who tweeted Wednesday: "Facebook has more profit than Google had revenue when they went public."

The Billionaire Friends Club
Facebook's IPO is going to make a handful of people very, very rich, starting with Zuckerberg. How rich? Business Insiderbreaks it all down for us (and keep in mind, these figures are based on a valuation of $87.5 billionthese already astronomical numbers could wind up higher):

Zuckerberg, Facebook's co-founder and CEO, owns 533,801,850 Class B shares (or 28.4 percent of the company) which are worth $24.9 billion by Business Insider's calculations. He's also got another $5.6 billion in Class A shares he can exercise.

Facebook COO Sheryl Sandberg owns 1,899,986 shares (0.1 percent) valued at $88.4 million, 3.5 million unexercised options, and a whopping 39,321,041 RSUs that would Sandberg a billionaire twice over if she can stick around to vest them.

And those are just the top dogs at Facebook. Business Insider reckons the company's IPO will create "a thousand millionaires" all told.

There's also a blink-and-you'll-miss-it mention in the S-1 filing of Napster founder and former Facebook president Sean Parker (remember him?), who, along with "affiliated entities" is listed as part of a voting agreement by a group of stockholders who have "agreed to vote all of their shares as directed by, and granted an irrevocable proxy to, Mr. Zuckerberg at his discretion on all matters to be voted upon by stockholders."

For more on that, VentureBeat's Jolie O'Dell describes "how Zuckerberg wrested control of Facebook from his shareholders" to turn his 28 percent share of the company into an effective 56.9 percent shareholder votes.

As for how much of the company Parker owns, it's not clear from the S-1 filing, but previous reports have stated that he's got a 4 percent stake worth $2 billion (probably closer to $3.5 billion going by current estimates of the company's valuation), while Facebook co-founder and sometime litigant Eduardo Saverin is reported to control 5 percent of the social network with shares worth $2.5 billion (or maybe $4.4 billion).

Oh, and Bono supposedly has a 1.5 percent stake in the company that could be worth $1.3 billion or more. Yes, that Bono. And people say Ashton Kutcher is a really smart tech investor for a celebrity.

About the Author

Damon Poeter got his start in journalism working for the English-language daily newspaper The Nation in Bangkok, Thailand. He covered everything from local news to sports and entertainment before settling on technology in the mid-2000s. Prior to joining PCMag, Damon worked at CRN and the Gilroy Dispatch. He has also written for the San Francisco Ch... See Full Bio

Get Our Best Stories!

This newsletter may contain advertising, deals, or affiliate links. Subscribing to a newsletter indicates your consent to our Terms of Use and Privacy Policy. You may unsubscribe from the newsletters at any time.